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There are three convenience stores in the student area west of the University of Texas campus. Store A sells the most beer, and barely looks at student IDs; but it also charges the highest price of the three. Store B is a bit stricter on fake IDs, refuses some underage students, and charges a lower price. Store C has the best prices, but its clerks inspect IDs thoroughly. My student reports that nobody makes it through with a fake ID. This near-campus oligopoly defines a new pricing strategy: lenience on IDs that is unsurprisingly related to the stores’ pricing policies. I wonder about differences in the characteristics of the patrons of the different stores.

Public higher education in the U.S. is not in good shape—and the main reason is lack of funds. States will not increase their funding, and often they severely limit tuition increases. My university appears to have hit upon a solution: product placement and direct advertising. The new computer building, the Gates Building, is part of the Dell Computer Science Center, and has a Dell logo and signs for eBay and PayPal in front of the building.

But why stop here? Five hundred students stare at me for 1-1/4 hours 28 times each fall semester. The university could ask me to advertise—wear a cap, or a t-shirt, just like a tennis star—showing the product of whichever companies bid the most for the rights to advertise on my apparel during class. While I would probably insist on some of the royalties, the bilateral monopoly between the university and me would surely raise funds for the university. With enough professors required to do this, public universities could alleviate some of their financial problems. No doubt readers have similar clever ideas for product placement that would help fund public universities, albeit at some cost in dignity.

I get invitations to guest lecture at English universities on Wednesdays, but almost never for Wednesdays in the U.S. I didn’t know why this difference exists, until one of the inviters mentioned that many English universities keep Wednesday afternoons free of regularly scheduled classes, historically so students can engage in inter-scholastic athletics. Universities thus have created a positive coordination externality.

We economics professors don’t engage in these athletic endeavors, but the athletic coordination creates a positive externality for economists: In scheduling seminars, we know that most faculty members at other universities are free to visit, and most of our colleagues should be available to attend the seminar. (HT: NT)

The black-white education gap has been widely observed at many age levels. In a new working paper called “Race and College Success” (abstract; PDF), Peter Arcidiacono and Cory Koedel examine why blacks who are admitted to college are so much less likely than whites to graduate:

Conditional on enrollment, African American students are substantially less likely to graduate from 4-year public universities than white students.* Using administrative micro data from Missouri, we decompose the graduation gap between African Americans and whites into four factors: (1) racial differences in how students sort to universities, (2) racial differences in how students sort to initial majors, (3) racial differences in school quality prior to entry, and (4) racial differences in other observed pre-entry skills. Pre-entry skills explain 65 and 86 percent of the gap for women and men respectively. A small role is found for differential sorting into college, particularly for women, and this is driven by African Americans being disproportionately represented at urban schools and the schools at the very bottom of the quality distribution.

Taking advantage of unique longitudinal data, we provide the first characterization of what college students believe at the time of entrance about their final major, relate these beliefs to actual major outcomes, and, provide an understanding of why students hold the initial beliefs about majors that they do. The data collection and analysis are based directly on a conceptual model in which a student’s final major is best viewed as the end result of a learning process. We find that students enter school quite optimistic/interested about obtaining a science degree, but that relatively few students end up graduating with a science degree. The substantial overoptimism about completing a degree in science can be attributed largely to students beginning school with misperceptions about their ability to perform well academically in science.

The Chronicle of Higher Education just published its survey of public university presidents’ compensation, which rose 4.7 percent, with four presidents receiving more than $1 million. During that year, public university faculty salaries rose less than 2 percent, a discrepancy that replicated the previous four years. Why the difference?

Market explanations would be that these wages reflect jobs increasingly well done relative to faculty performance (increasing relative productivity) and/or increasing difficulty in attracting talent. The first explanation is not credible: having taught at public universities for 40 years, I’ve seen the quality of public universities decline compared to private universities. (In 1969, one could argue that 3 of the top 10 economics departments were at public universities. Today, only 1 is.) Nor is there a dearth of high-quality potential university presidents.

In 2010, CBS and Turner Broadcasting agreed to pay $10.8 billion to broadcast the NCAA men’s basketball tournament from 2011 to 2024. As a result of this contract, fans of this tournament can watch these games on four different networks. And perhaps more importantly (for those of us who work during the day), we can see these games on our computers in our offices.

Certainly all these games make us fans very happy. And all that money has to make coaches, athletic directors, and other university administrators happy. But what about the people we are actually watching?

The people on the court are referred to as student-athletes. And according to the NCAA rules, these athletes are supposed to be amateurs. In other words, other than a scholarship, these athletes are not supposed to be paid.
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We present a method of ranking U.S. undergraduate programs based on students’ revealed preferences. When a student chooses a college among those that have admitted him, that college “wins” his “tournament.” Our method efficiently integrates the information from thousands of such tournaments. We implement the method using data from a national sample of high-achieving students. We demonstrate that this ranking method has strong theoretical properties, eliminating incentives for colleges to adopt strategic, inefficient admissions policies to improve their rankings. We also show empirically that our ranking is (1) not vulnerable to strategic manipulation; (2) similar regardless of whether we control for variables, such as net cost, that vary among a college’s admits; (3) similar regardless of whether we account for students selecting where to apply, including Early Decision. We exemplify multiple rankings for different types of students who have preferences that vary systematically.